JOIN USIn the second quarter of the year, RICS reported the sharpest declines in global commercial property rents in the survey’s five-year history, with Singapore, Ukraine, Spain and Ireland leading the way. Surveyor sentiment in Spain and Ireland remained depressed with 97 per cent more chartered surveyors in both countries reporting a fall rather than a rise in rents. Surveyors in Singapore and the Ukraine were unanimous that rents have fallen with the net balances in both countries reaching 100 per cent.
Notwithstanding continuing attempts by agents to offer more attractive inducements, forward looking rental sentiment remains pessimistic. Chartered surveyors in Italy, Spain and Ireland remain particularly downbeat about the outlook for rents. As much as 97 per cent of surveyors in both Ireland and Spain expect rents to continue to fall rather than rise over the next quarter while surveyors in Croatia and Singapore are unanimous that rents will fall.
RICS chief economist Simon Rubinsohn said, “Higher yields may be starting to attract interest particularly in economies such as the UK and Hong Kong where prices have already corrected significantly and borrowing and saving rates are at historic lows.”
Modest falls in emerging markets
The decline in capital values eased during the second quarter driven by more modest falls in some emerging markets with China and India out in front. Eight per cent more surveyors reported a fall than a rise in capital values in China, up from 49 per cent in the first quarter. However, the most stunning improvement was found in Hong Kong where the net balance actually turned positive. As much as 57 per cent more chartered surveyors reported a rise than a fall in capital values up from a negative balance of 81 percent. More generally, expectations for further price rises remain bleak with North America presenting the gloomiest picture.
Tenant demand rises
Commenting on the survey results Sachin Sandhir, Managing Director & Country Head, RICS, India said, “The emerging Asia region was the best performing area in the latest global property survey from RICS with India at the forefront. Tenant demand rose for the first time in 18 months with the office market outperforming the industrial and retails sectors. Enquiries to occupy business space are now rising offering near term hope that ongoing strengthening will continue into Q3. Furthermore, agents were less pessimistic on the rental outlook indicating that the pace of decline in rents may ease in the coming months. The improved outlook has filtered into price expectations with only modest falls in values anticipated in Q3.”